New Delhi, Feb. 8: The Cabinet Committee on Economic Affairs (CCEA) today gave the go-ahead to the maiden offers in three public sector power companies to raise Rs 1,500 crore for the National Investment Fund.
The divestment exercise involves disposing of 10 per cent in Rural Electrification Corporation (REC) and 5 per cent each in Power Grid Corporation of India Limited (PGCIL) and National Hydroelectric Power Corporation (NHPC).
“The government will be piggybacking on the maiden offers of REC, PGCIL and NHPC to raise Rs 1,500 crore,” finance minister P. Chidambaram told journalists after the CCEA meeting.
Chidambaram said the three PSUs will actually raise Rs 2,400 crore, of which Rs 1,500 crore would go to the National Investment Fund. He added that the selloffs are based on the estimated current book value of these unlisted companies.
While REC would realise Rs 420 crore through the IPO, PGCIL and NHPC plan to raise Rs 971 crore and Rs 1,490 crore, respectively.
The proceeds from the divestment would go to the National Investment Fund as a corpus. Besides funding projects in the power sector, these proceeds would also be used to meet commitments in the social sector, particularly flagship programmes like the employment guarantee scheme and the Sarva Shiksha Abhiyan.
Chidambaram said external affairs minister Pranab Mukherjee had met the CPI-M leaders in January and told them that “no money was flowing into the National Investment Fund”.
Post-issue, the government’s share in REC will come down to 81.22 per cent, while that in PGCIL and NHPC will be reduced to 86.36 per cent each, the minister said.
Chidambaram said the book-running lead managers would be appointed by the central public sector enterprise through competitive bidding.
However, the Left parties appeared to be against the move. CPM leader Nilotpal Basu said, “These are profit making public sector companies and the Left parties are opposed to any divestment of their shares. We have not been consulted on the issue.''
The CCEA today also allowed Bharat Earth Movers Limited (BEML) to raise funds through public issue of 49 lakh shares of Rs 10 each for its modernisation and expansion programme. Chidambaram said the price band would be decided by the board of directors on the written recommendation of the book-running lead manager.